Spooked by rising inflation, central banks in the West, starting with the Bank of England in late 2001, have been ratcheting upsteadily, even as Russia’s invasion of Ukraine 13 months ago, and the energy shock that followed, threatened to plunge oil and natural gas importers such as Germany, Britain and Italy into recession.
The second is that rate hikes boost the odds of recession. The International Monetary Fund reported on March 15 that housing prices were falling in most OECD countries, with the biggest recent retreats in Denmark, New Zealand, Sweden and Canada. Mortgage rates are increasing, putting strain on households. By the end of 2022, the average 30-year fixed-rate mortgage in the United States rose to a two-decade high of 7.1 per cent.